Can These Hybrid Cars Save Detroit?

The buzzword out of Detroit these days seems to be "hybrid."

As the Big Three automaker CEOs return to Washington today -- arriving by hybrid vehicles instead of private jets -- they will try to sell Congress on turnaround plans focusing on an aggressive new line of fuel-efficient cars.

Lawmakers might buy the plans from Ford, General Motors and Chrysler, but it is going to be a lot harder to sell American drivers on the hybrid cars.

The key may be gas prices.

Maryann Keller, who runs an automotive consulting company, said that people lined up to buy more-efficient cars only after gas topped $4 a gallon.

"Short of that, people are going to buy what suits their pocketbook and suits their needs," Keller said. "It's sort of human nature to want to buy the biggest and fastest, if you can afford it. And you're not gong to think necessarily about the environment in that purchase. At least, the vast majority won't."

To make things worse, consumers wanting that nice shiny hybrid SUV that Chrysler CEO Robert Nardelli arrived in might just be out of luck. Chrysler has plans to shut the factory where the Aspen is made. In fact, the automaker doesn't plan on having any hybrids in production until the 2010 Dodge Ram Pickup truck starts moving down the assembly line sometime next year.

Jack Nerad, executive market analyst for Kelley Blue Book, said that hybrids tend to have better resale value than say SUVs, but it doesn't mean the cars are the panacea for the automakers.

"Certainly a hybrid alone will not save Detroit," Nerad said.

In the 1980s, American automakers profited off the sale of minivans. Then in the '90s and first part of this decade, the SUV and pickup took over. Call it the age of the Hummer.

But when gas prices started to climb in recent years, Americans turned toward more-efficient vehicles. That -- along with higher labor and production costs -- in part have crippled the Big Three automakers. (The current recession and limits on borrowing were the nail in the coffin.)

"We're a nation where there's sort of an underlying assumption that we have a birthright to cheap fuel," Keller said. "The car has shaped our lives. It has shaped where we live, how we live, where we work and we're paying the price for it now."

Hybrid Sticker Shock

Keller said that there are plenty of enhancements that automakers could make to conventional vehicles to improve gas mileage without the cost of the hybrid.

After all, hybrids typically cost $4,000 more than a conventional vehicle, according to Stephen Spivey, senior auto industry analyst with Frost & Sullivan.

When gas prices were at $4 a gallon, that extra cost would be quickly recouped by city drivers. But for those primarily on the highway, the heavy weight of the battery and lack of braking -- which charges the battery -- didn't make the cars economical.

Now that gas is below $2 a gallon -- although nobody is sure how long that will last -- hybrids don't make sense on price alone.

Spivey said hybrid sales track closely with the price of gas.

To see this in action, look no further than the Toyota Prius. In April, when gas was climbing fast, 21,757 of the popular hybrids were sold. But last month, after the return of cheap gas, only 8,660 of the cars sold.

So why are automakers centering their recovery plans, in part, around hybrids?

Spivey said there is a growing demand in Congress for better fuel economy and they are "sensitive to their audience."

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